US tech giant Google paid £36.4million in UK corporation tax last year on UK sales of £1.03bn and a pre-tax profit of £149m in the 12 months to the end of June 2016, according to its latest accounts.
Tech firms have been under pressure over their tax arrangements, especially Google.
Despite the figure being higher than what it has paid in the past, Labour says that Google is still not paying its “fair share” of tax in the UK.
Whilst the firm’s accounts reveal that it generated £148.8million of pre-tax profits in the UK on revenues of £1billion, recent accounts filed by Google’s parent company, Alphabet, in the US show UK sales of more than £6bn. This discrepancy comes to business from British customers buying advertising space which is channeled through Google’s European headquarters in Ireland.
John Cullinane, of the Chartered Institute of Taxation, was quoted by The Daily Mail as saying:
“The amount of corporation tax Google pays in the UK is not based on the amount of profit Google makes from its sales to UK customers.
“If it were, Google would be paying about ten times as much – probably about £300million.”
“There are big swings and roundabouts. That’s just how things work.”
A Google spokesman said: “As an international business, we pay the majority of our taxes in our home country, as well as all the taxes due in the UK.
“We have recently announced significant new investment in the UK, including new offices in Kings Cross for 7,000 staff.”
abour’s John McDonnell said the latest figures showed Google was still not paying enough tax.
He said: “It is a national disgrace that by paying just £36m in tax Google could have an effective tax rate lower than many working families in our country.
“And it exposes the complacency at the heart of this Tory government, which is allowing this to still continue despite last year’s scandal.”
He added: “It seems that the so-called ‘successful’ tax deal with Google that George Osborne boasted about last year has meant that they are still not paying their fair share under his successor Philip Hammond.”
Meg Hillier MP, chair of the Public Accounts Committee (PAC), was quoted by the BBC as saying: “Yet again we see a large corporation paying a rate of tax that belies its significant presence and business transactions in the UK.
“This is why the PAC is working internationally to press for greater tax transparency so that we can all see clearly how much tax corporations pay and where.
She added: “There is already strong international support and growing collaboration for changing the way tax is reported by multinationals.
“This latest tax contribution from Google just underlines why this is so important.”